The (RBI) on Friday cancelled the banking licence Paytm Payments Bank for non-compliance with norms, saying that bank’s operations were detrimental to the interest of its depositors. The central will now approach the High Court to request the closure of the bank. The development is concerning for users as many must be wondering what happens to their Paytm Wallet, UPI, and account now. But, first let’s look at what RBI said:
What the RBI said?
The central bank said in its statement, the Paytm Payments Bank failed to comply with the conditions stipulated in the Payments Bank licence issued to it.
The licence was cancelled effective from the close of business hours on Friday, the RBI said, adding that has enough liquidity to repay its entire deposit liability upon winding up.
The RBI also noted that the affairs of the bank were conducted in a manner detrimental to its own interests as well as its depositors.
“The general character of the management of the bank is prejudicial to the interest of depositors as also the public interest… no useful purpose or public interest would be served by allowing the bank to continue…,” the RBI said in a statement.
Paytm Payments Bank was not complying with certain norms of the Banking Regulation Act, 1949, it added.
According to the central bank, Paytm Payments Bank Ltd is prohibited from conducting the business of “banking” or any additional business specified under the Banking Regulation Act with immediate effect.
But, what happens to your Paytm accounts now?
First of all, your money is safe. RBI has specified in its statement that ‘bank has enough liquidity to repay its entire deposit liability upon winding up.’
Also, you can continue using the Paytm App for UPI, recharges, and payments etc as before.
Following the RBI action, , which owns Paytm brand, mentioned in its company filing that it has no exposure to Paytm Payments Bank (PPBL) as it had already impaired its investment in the beleaguered entity as of March 31, 2024.
One 97 Communications Limited also said its key services, including the Paytm app, Paytm UPI, Paytm QR, Soundbox, card machines and Payment Gateway, will continue to operate uninterrupted despite regulatory action against its associate entity, Paytm Payments Bank Limited, by the Reserve Bank of India.
The company further clarified in its filing that its broader ecosystem, including Paytm Gold and Paytm Money, remains unaffected and will continue normal operations.
PPBL, was an associate firm of -promoted fintech firm Paytm, came under the regulatory scanner on multiple occasions earlier, including in March 2022 when the central bank barred it from onboarding new customers.